Inside almost all of our products is the story of a farm somewhere in the world. As a general business practice, we do not own or operate farms, and we buy only a small percentage of our ingredients directly from farmers. But through our global suppliers, our system buys millions of tons of fresh fruit, corn, tea, sugar, coffee and other ingredients every year. The future of our business depends on a reliable long-term supply of those ingredients.
At the same time, the futures of farming families and ecosystems around the world depend on crops being grown more sustainably. Agriculture is the world’s largest industry, employing more than 1 billion people and generating more than $1 trillion US of food annually. In the report, Realizing a New Vision for Agriculture: A roadmap for stakeholders, the World Economic Forum and McKinsey & Company estimate that up to 30 percent of greenhouse gas emissions are attributable to agriculture, counting all related impacts, including deforestation. The report also indicates that agriculture accounts for 70 percent of worldwide water withdrawals.
Our global system and vast supply chain provide many opportunities to improve agricultural sustainability, and our purchasing power and long-standing relationships with suppliers and processors give us an influential voice. We are contributing to the global movement toward more viable agriculture through innovative partnerships and a supply chain that increasingly stresses the need for sustainability. We believe that with the wide-scale adoption of better management practices, agricultural production can help preserve and restore critical habitats, protect watersheds and improve soil and water quality, all while meeting the needs of society.
A matter of balance
Our approach to sustainable agriculture is founded on principles to protect the environment, uphold workplace rights and help build more sustainable communities. We seek to mitigate business risk by addressing challenges to the availability, quality and safety of agricultural ingredients; to meet consumer demand for products that align with a healthy and sustainable lifestyle; and to balance the costs of sustainability by leveraging relationships and initiating new opportunities as they make sense.
To support more sustainable agricultural practices, we are:
- incorporating sustainable agricultural criteria into our long-term ingredient sourcing plans;
- working with partners and suppliers to improve livelihoods through efforts to increase crop yields and reduce production costs; and
- helping farmers to improve agricultural practices and reduce environmental impacts, such as minimizing the use of pesticides and optimizing fertilizer applications.
We are carrying out our strategy by working with key partners to identify risks and opportunities; fostering innovation through pilot projects in key regions; and making use of validation mechanisms—including certification in some cases—to verify that we are meeting our sustainability criteria. We have adopted a holistic view and are working with our suppliers to help develop and encourage more sustainable agricultural practices.
Setting priorities, assessing risks and opportunities
In 2012 we began a comprehensive baseline assessment to better understand supply and demand as well as risks and opportunities for the top 10 agricultural commodities on which our products and growth strategy depend. This assessment will lay the foundation for our agricultural commodity strategy going forward. We are partnering with key suppliers to establish baselines and influence producers to improve the sustainability of crop production, focusing our initial efforts on sugarcane, oranges and forestry.
Growing Adoption of the Bonsucro Standard
Sugarcane farmers, like many growers, face challenges to the social, environmental and economic sustainability of production. For several years, we have helped advocate for an independent, global standard to define and promote continuous improvement for the production of ethanol and sugar from sugarcane.
As a member of Bonsucro, we worked with peer companies, sugarcane producers and nongovernmental organizations, including World Wildlife Fund (WWF), to implement the first global metric standard for more sustainable sugarcane production. The standard is composed of five principles:
- Obey the law.
- Respect human rights and labor standards.
- Manage input, production and processing efficiencies to enhance sustainability.
- Actively manage biodiversity and ecosystem services.
- Continuously improve key areas of the business.
Bonsucro launched its production standard and certification program in 2010. The standard requires evaluation against more than 40 indicators on the environmental, social and economic impacts of sugarcane production. In June 2011, a sugar mill in São Paulo, Brazil, became the first to be certified under Bonsucro’s new standard, and our system was the first buyer of the mill’s certified sugar. Since then, 16 sugarcane mills have been certified in Brazil. By the end of 2011, Bonsucro-certified mills had produced approximately 1.6 million tons of sugar.
1.6 million tons of certified sugar produced in 2011
Piloting Sustainable Farming Projects Worldwide
With partners such as WWF and the United Nations Development Programme (UNDP), our system has contributed to more than 40 agriculture sustainability initiatives in more than 25 countries. Most of these projects begin as pilot programs so that farmers and suppliers can determine what works and then scale up and sustain those solutions as appropriate.
Improving mango yields in Andhra Pradesh
In 2011, Coca-Cola India and Jain Irrigation announced the launch of Project Unnati, which is encouraging mango farmers in the state of Andhra Pradesh to adopt drip irrigation and a method of farming called ultra-high-density plantation practice. Ultra-high-density plantation practice enables mango orchards to reach their full fruit-bearing potential in three to four years, rather than the seven to nine years enabled by conventional farming, meaning farmers earn money from the fruit sooner. The practice also makes it possible for farmers to plant as many as 600 trees per acre, dramatically increasing yields. Conventional farming methods allow for about 40 trees per acre.
During the first phase of the project, 200 demonstration farms between one and three acres in size will employ the ultra-high-density plantation technique along with drip irrigation, which uses less water per kilogram of mangos produced. Later, the demonstration farms will be used to train other farmers. In all, Project Unnati has the potential to double mango yields and improve the livelihoods of more than 50,000 farmers in the next five years.
Farming for a healthier Great Barrier Reef
Through our Coca-Cola Foundation, we provide financial support to Project Catalyst, an award-winning, five-year, $26 million partnership among our Company, WWF, Reef Catchments (Mackay Whitsunday Isaac Natural Resource Management), the Australian government, farmers and others. Project Catalyst promotes farmer-driven innovations that reduce pesticide and fertilizer runoff into the Great Barrier Reef lagoon and the freshwater catchments that drain into it. The project provides funding and technical expertise to farmers who have developed new sustainability practices but need resources to implement them. Communication is also a key part of Project Catalyst; newsletters and a website promote innovations, enabling growers to share best practices and lessons learned.
Since its launch in 2009, Project Catalyst has increased from 19 participating cane growers and 4,800 hectares of farmland to 78 growers and more than 49,000 acres. The project has improved the quality of more than 101,725 megaliters (more than 26 billion gallons) of runoff by reducing the amount of nitrogen, phosphorus, herbicide and other pollutants flowing into the Great Barrier Reef. Through The Coca-Cola Foundation, our Company has contributed more than $1.77 million to the project.
In 2011, Project Catalyst engaged more land managers. Inspired by the project’s outcomes to date, a number of farmers independently emulated practices piloted by Project Catalyst growers, improving runoff and drainage water quality by an additional 17,500 megaliters (4.6 billion gallons) on 8,649 acres.
In November, several Project Catalyst partners hosted the 2011 Bonsucro Annual General Meeting, bringing together Bonsucro growers from multiple countries to learn about the methods developed as part of the project. Additionally, in February 2012, Project Catalyst held its second annual grower’s forum, providing an arena for Queensland growers to exchange information on best practices and learn about methods for reducing chemical runoff.
Drought relief in Guangxi
The Guangxi Sustainable Sugarcane Initiative is part of our partnership with UNDP, the Chinese Government and the government of the Guangxi Zhuang Autonomous Region in southern China. Launched in 2010 in the counties of Shangzi and Longzhou and expanded to a few other counties in 2011, the initiative seeks to provide sugarcane farming communities in drought-stricken Guangxi with improved access to drinking water and more efficient irrigation. New infrastructure will direct treated wastewater from a sugar mill to the cropland, providing irrigation and possibly better yields as a result of nutrients in reclaimed water.
With the completion of the Shangzi and Longzhou projects in 2011, the project has benefited about 3,000 farmers, indirectly benefited more than 100,000 rural residents and improved 30,476 acres of sugarcane. Two other projects in Guangxi are under way and expected to be completed in 2012.
Protecting Freshwater and Small Farms in South Africa
Project Khula is helping small-scale sugarcane farmers in the KwaZulu-Natal region of South Africa improve their yields and livelihoods while reducing environmental impacts.
Launched in September 2010 and named in 2012 with the Zulu word for “growth,” Project Khula leverages the mentorship program of a local growers association to train smallholder farmers in better land and catchment management practices. It aims to support development of more than 3,000 small-scale growers on over 8,400 hectares, and to help the local sugar mill, the local government and other local stakeholders organize smaller farms into cooperatives. The cooperatives are expected to help improve productivity and provide opportunities for funding expansion of the program.
Mentors will work with farmers to maintain and restore riparian areas and increase pesticide use-efficiency. The project also seeks to remove invasive plant species threatening freshwater ecosystems and to develop improved sustainable practices that can be adopted by other South African sugarcane growers.
In 2011, the project team assisted in the formation of two planned cooperatives, engaging 97 farmers who farm about 250 acres. Cane plantings on the farms could eventually produce as much as 8,000 tons of sugar every two years, providing farmers and their families with a potential collective income of 3 million rand. Farmers also cleared 266 acres of invasive trees and shrubs, helping to conserve local freshwater sources.
Improving Livelihoods for Mango Farmers in Kenya and Uganda
We expect our juice business to triple by 2020. To make sure we can source enough juice to meet that target—and to help improve the livelihoods of small-scale fruit farmers, many of whom are women—we formed Project Nurture, an innovative four-year, $11.5 million US partnership with the Bill & Melinda Gates Foundation and TechnoServe. By increasing production of mango and passion fruit suitable for both the fresh fruit and juice markets, Project Nurture is intended to double the farming incomes of more than 50,000 small-scale farmers in Kenya and Uganda by 2014. Our East Africa business unit will invest a total of $4 million in the project, along with $1.5 million US in in-kind contributions, including infrastructure investment, technical expertise and fruit purchases.
14,000 female farmers trained through Project Nurture
Through Project Nurture, local farmers will gain a market for their fruit. Consumers will be able to support their local farmers through the purchase of beverages. And our business will benefit from procuring locally produced fruit, lowering our costs and increasing supply chain flexibility. The program has established a goal of ensuring that by 2014 at least 30 percent of participating farmers will be women.
By the end of 2011, almost 40,000 farmers had been trained through Project Nurture, 14,000 of whom are women. More than 18,000 metric tons of fresh fruit from Project Nurture farms have been sold to date. In late 2010, we launched Minute Maid Mango Nectar in Kenya. It is the first product to use juice sourced from Project Nurture and provides consumers with the opportunity to support local mango farmers.
In 2011, TechnoServe worked with selected farmers and exporters to ship fresh mangos and passion fruit to the Middle East. The program includes training farmers on quality specifications, logistics and negotiation of prices and provides assistance with agronomy and postharvest handling. Work has also recently been completed in the development of two more Kenyan mango varieties, Apple and Tommy, for use in the manufacture of Minute Maid juice and juice drinks. Minute Maid juice drinks made from Apple mangos will be launched in eight countries beginning in July 2012.
Building Hope for Mango Growers in Haiti
Based on our Project Nurture model, the Haiti Hope Project is a five-year, USD $9.5 million partnership intended to double the incomes of 25,000 Haitian mango farmers. Our partners in the project include the Multilateral Investment Fund, a member of the Inter-American Development Bank, the U.S. Agency for International Development and TechnoServe. The Clinton Bush Haiti Fund, the Soros Economic Development Fund and others are among the supporters of the project. The project has partnered with a local financial institution, Sogesol, to draft credit product criteria for the project. Our project team also works closely with Haitian authorities to make sure the project’s goals align with those of the local government.
We began implementing Haiti Hope in September 2010, nine months after Haiti’s catastrophic earthquake. Since then, the project team has established relationships with farmer groups representing thousands of mango farmers. More than 7,300 farmers had joined the program by the end of 2011, and 42 percent of them were women. Our company’s investment at the end of 2011 totaled USD $1.4 million.
The Coca-Cola Company has pledged to invest USD $3.5 million to the project over a five-year period. As part of the Company’s overall contribution, in January 2011, our Odwalla brand launched Haiti Hope Mango Tango and pledged to donate 10 cents for every bottle sold, up to half a million dollars a year for the duration of the project. Our project team is researching processing options with the intent of eventually enabling Haitian-grown mangos to be used as an ingredient in Haiti Hope Mango Tango.
In addition to the projects described above, we are engaged in these partnerships:
We are piloting a farm-level self-assessment with leading agriculture suppliers. Feedback from this pilot will inform a revised draft that will be used to develop a baseline of our supplier’s farm-level sustainability practices, recognize best practices and identify areas for improvement.
We are mapping the sustainability initiatives of more than 100 fruit suppliers. Results are expected to provide opportunities to help develop and encourage more sustainable agricultural practices in our juice supply chain.
In collaboration with Conservation International, we have developed tools designed to help identify key social, environmental and agronomic issues and opportunities related to crops of strategic importance to the Company. Conservation International helped develop and pilot a supplier farm assessment survey to better understand the state of knowledge regarding environmental performance within our supply chain.
We are partnering with EARTH University and our supplier, TicoFrut, to promote sustainable citrus production in Los Chiles, Costa Rica. The project includes the development and pilot use of organic amendments and biofertilizers to reduce the amount of agriculture-based greenhouse gases released in the atmosphere and to increase the amount of organic matter in the soil.
Through our partnership with WWF, we have partnered with Van Buren Conservation District and The Nature Conservancy to work with corn farmers in the Paw Paw River watershed in Michigan to implement conservation practices that return water to nature, build healthier soils and conserve biodiversity.
In partnership with Cargill, Incorporated, and WWF, we launched a sustainable corn project to improve the livelihoods of farmers and protect biodiversity by improving yields, reducing waste, conserving water, protecting wetlands and reducing the environmental impact of agriculture in Jilin Province, China.
We are helping to advance a lab in La Lima, Honduras, where researchers will develop solutions for controlling agricultural pests in cane fields through biological control rather than pesticides. The lab—developed in partnership with WWF and other organizations—is expected to produce enough biocontrol to treat more than 16,000 acres by its third year and help reduce the agrochemical runoff that imperils the Mesoamerican Reef—the largest reef in the Atlantic Ocean. Pilot application of biocontrols took place at two milling sites in 2011. Wider, commercial-scale application was expected to begin in August 2012.
Effecting Change Deep in the Supply Chain: An Ongoing Challenge
As with our other sustainability efforts, much of our success in promoting sustainable agriculture depends on our relationships with suppliers. We are increasingly embedding our sustainability policies and practices in our procurement processes through our Supplier Sustainability Council and through our Sustainable Agriculture Guiding Principles, which articulate our expectations for all of our suppliers of agricultural ingredients. Also, because it can be difficult to assess whether the thousands of farmers far “upstream” in our supply chain align with our policies and beliefs, we are deepening our partnerships with primary suppliers to help farmers and farmers’ cooperatives increase transparency and provide us with more information about their practices.